Traverse City Record-Eagle

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December 20, 2012

UPDATE: Motorists thrilled by low gas prices, then they leap

Pump prices rise suddenly across the Traverse City area

TRAVERSE CITY — Traverse City area motorists hoping for a little more holiday magic at the gas pump got the Grinch instead.

Gas prices at many stations rose dramatically in northern Michigan Thursday. The day started with prices for regular grade gas ranging from $3.01 to $3.06, but by the end of the day they’d jumped to $3.25.

Will Shira was filling up at the Mutual Station at the corner of South Airport and Garfield roads early Thursday and was thrilled at the $3.01 per gallon price. Driving from Rapid City to Traverse City and back daily, he’s been spending a lot less compared to when prices were at a statewide high of around $4 a gallon earlier this year.

“I’m saving around 15 to 20 bucks a week on gas with prices like this,” Shira said.

AAA Michigan spokeswoman Nancy Cain said prices fell because crude oil prices are lower, supply is plentiful and demand is down.

“We would anticipate that prices should continue to come down a bit lower,” she said.

That’s not what happened. By noon, some stations increased prices to $3.25. At the Holiday Stationstore at S. Airport and Cass roads, Manager Steve Schechter said in the morning that prices were low there — $3.01 for regular — because that’s what competitors were charging.

“Basically, we’re selling at below cost, believe it or not,” he said. “It’s just what the competition is doing. They just keep on lowering the prices, and of course, we can’t be higher.

“No one wants to be higher than anyone else.”

By early afternoon, the price at his station was up to $3.25.

“All of a sudden, I just got the email to go up,” Schechter said later. “I don’t know why. Everyone just went up at the same time.”

A random phone check of stations around the area during the afternoon showed most raised prices to $3.25 or thereabouts. Brandon Daniels, communications manager for Marathon Petroleum, owners and operators of Michigan Speedway stations, also said in the morning that prices were low because crude oil prices are down, supply is ample and demand had fallen. Contacted again a few hours later after prices had gone up, he said, “Either the cost of materials went up, or just competition factors, that they didn’t feel they had to price that aggressively.”

On Thursday morning, Roy’s General Store and Hentschel Hardware at Three Mile and Hammond roads was selling gas at $3.01 per gallon. CEO Rob Hentschel said then that prices were below cost and dropping lower and lower due to competition.

“If you want to keep your traffic flow, you just follow the market,” he said.

By midafternoon, Roy’s price was at $3.26.

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